Joe Capper: Well, Brooks, I’m sorry if I communicated that to you. I think it’s going to be potential disruption for the industry. If it changes behaviors to the point where it impacts us, I think we’re a much better position to navigate through that. I don’t see it as much of a near term threat or frankly, midterm or long term for mid long is obviously a plus, plus, as I indicated, that’s the way we view it. We didn’t change our guidance because there’s some unknowns. Right. We still have to work through this process and see what ultimate form this takes and when it is ultimately enforced or rolled out. So that date has not been determined yet and again, we don’t know what the final format is going to look like. This may be tweaked somewhat before it’s actually implemented.
So I think the prudent thing to do is just say we’re not changing guidance at this point. And as I indicated in our prepared remarks, given the way we came out of the shoot in the beginning of the year, had it not been for this, in all likelihood, we would have tweaked the guidance up a little bit.
Brooks O’Neil: Yes, all that makes sense. Okay, I want to shift gears. Obviously, you’ve commented about the opportunity you have on the surgical side of the business and your excitement about, pursuing growth opportunities there. Can you talk just a little bit about some of the near term things you think are big opportunities for you? And then, I’m curious. Obviously, I know there’s a big market for xenografts, but that’s a little bit of a departure for MiMedx relative to history and just talk about some of these alternate, let’s call, I’ll just call them alternate source products, just recognizing many of them are not, they’re not human derived products. So how big an opportunity do you see and sort of what do you think is your path to go after that?
Joe Capper: Based on market data available to us, it looks like the xenograft and synthetic portion represent a little bit more than half of the skin submarket. And then the amniotic products are probably in the 43% to 45%, which is really the only place we play today. So it opens up a lot more opportunity for us. So your question about, it’s not something that we’ve done in the past. Same channel, though, Brooks. It’s the same commercial channel, and there’s cases where we don’t win because for one reason or another, a hospital prefers to use non-human derived tissue. This gives us something in the bag to compete in those instances. Look, we clearly believe and will continue to develop in the production of additional human-derived tissue and placental dried tissue, because we see the results of it.
We know it works. We know it’s far superior to anything else out there, but you have to have offerings for different needs. So this is a step that we’re pretty excited about.
Brooks O’Neil: Absolutely. That makes sense. And it just popped into my brain, and this will be my last question, is, obviously, I think there’s some international markets where xenographs are favored or have a strong position. So just talk a little bit about what you see and what your plans are for attacking the international market.
Joe Capper: Yes, you’re exactly right. It gives us another arrow in the quiver internationally. Some of the markets are much more difficult to penetrate with only a human drought tissue. As you know, we’re having success in Japan, but that’s taken us quite some time to develop that market, and we’re starting to pick up some steam there. I indicated that we had a nice growth rate, albeit off of a relatively low base, but we continue to enrol more physicians, and physicians continue to repeat order the product, which is really, really good to see. So we expect that to continue growing. There’s other international markets that we’re starting to look at, but too early to report on. But clearly this gives us more opportunity as we look to develop markets abroad.
Brooks O’Neil: Absolutely. Great quarter. Great job, Joe. So excited to be following what you’re doing.
Joe Capper: Well, Brooks, we’re glad to have you.
Operator: Our next question is from the line of Anthony Petrone with Mizuho. Please proceed with your questions.
Anthony Petrone: Thanks for taking the questions. Congrats to on the very strong performance. One queue, you’re out of the gate. Maybe back to LCD and I’ll have a follow up on xenograft AXIOFILL. On the — I guess when we look out, you’re breaking out us physician office. Now you did $30 million, a little over $30 million in the quarter. Now how much of that us physician office today is EPIFIX and EPICORD versus EPIEFFECT. So just looking at what’s on the covered list versus non-covered list in that $30 million 1Q US physician office number and then I’ll have a couple follow ups.
Joe Capper: Anthony. I’ll just start by saying thanks for the congratulations. We’re — excuse me, super pleased with the way we started the first quarter. With regards to private office mix, we really aren’t breaking out individual products, but it’s clear since we launched EPIEFFECT at the beginning of Q4 that it certainly a big contributor to the growth in our private office space. And if you go back and look at like Q2, Q3, we were growing in private office with EPIFIX. So you could see, you could go back and calculate the delta, but it’s the portfolio of products continues to grow in that sector and we think that we’re well positioned to continue to do so. And again, as I indicated, we’re going to work real hard to make sure EPIEFFECT is accessible as well.
Doug Rice: Only thing I’d add, Anthony, is it’s only this kind of second quarter launch of EPIEFFECT and EPIFIX, as Joe mentioned in the prepared remarks, flagship product, its head and shoulders, the rest of the portfolio.
Anthony Petrone: That’s helpful. And then Joe, helpful on quantifying here 60% to 80% of the activity, let’s say using a base year of 2022, or maybe even 2023, was in those non covered products. You also mentioned that there’s some overutilization and some pricing in that number. When I think you look at that 2022 Medicare number, that was north of a $1 billion. So is there any kind of rough estimates on what you think has been out there in terms of overutilization and premium pricing? Just to kind of level set what we think was in that $1.1 billion $1.2 billion CMS 2022 number for US physician office for skin substitute products?
Joe Capper: Yeah, that was 2022. God knows what ’23 looks like. We haven’t seen that number yet. So my guess is that’s much higher. I can’t bifurcate to volume versus price. I would say majority of it’s probably price based on what we have seen in the marketplace. I just put the cautionary comment out there that you take the price equation out. There’s probably. I think logically there’s. Anthony, there’s some overutilization, right because I’ve seen it in every part of healthcare that I’ve ever been in. When the economic incentives are that overwhelming, people do some crazy things.
